Anti-Tax Law Evasion Schemes - Questions and Answers
Q. What type of filings do zero or untaxing advocates submit?
A. Untaxing advocates submit returns claiming income is not taxable. Some report all of their income but take a deduction to reduce AGI to nothing. Some prepare returns with zeros entered in all lines. Some file returns with only names, TIN's, addresses and message. Others are non-filers who are persons that do not alert IRS to their position.
Q. How do taxpayers get back into the system and file correctly?
A. If you believe you have incorrectly filed, you should file an amended return. If the amended return results in additional tax owed, you may also be subject to interest and penalties. However, amending your return may reduce the amount of penalties and interest that you eventually owe.
Q. What happens if I do not amend my return?
A. If your return is audited, the possible penalties, interest, and legal costs associated with an abusive tax promotion can be significant. Criminal penalties may also apply. This is in addition to the tax due and fees you paid for the promotion. You can contact the Internal Revenue Service at 1-800-829-1040, if you have any questions.
Q. The information presented by the promoter sounded legitimate. Now I have concerns regarding this promotion. Who do I contact to report information on the promotion and promoter?
A. Contact the Internal Revenue Service at 1-866-775-7474 or e-mail the Tax Shelter Hotline at email@example.com.
Q. Can I get more information on the Internet?
A. Yes. Additional information is available at the following IRS web sites:
- The Tax Fraud Alerts section provides information on tax scams and explains how to report suspected tax fraud.
- The Abusive Tax Shelter site provides information to help identify some red flags that may be present in an abusive tax shelter.
- The IRS Newsroom's page on Tax Scams/Consumer Alerts describes a number of common tax scams. If any of these apply to your investment, you should consult a tax professional not involved in promoting the investment. Or you may contact IRS to determine how it will treat such a promotion.
- Or view the following Publications
- Publication 334, Tax Guide for Small Business
- Publication 17, Your Federal Income Tax for Individuals
- Pub 3995 (8-2003) Is It Too Good To Be True - Recognizing Illegal Tax Avoidance Schemes (PDF)